Ex-Michigan Supreme Court justice sentenced to one year, one day

Former Michigan Supreme Court Justice Diane M. Hathaway has been sentenced to one year and one day in prison for her role in hiding assets in order to obtain permission to short sell a Grosse Pointe Park home.

U.S. District Judge John Corbett O’Meara also ordered Hathaway to pay $90,000 in restitution to ING Direct, and serve two years’ probation.

She pleaded guilty to bank fraud charges in federal court Jan. 29, just eight days after she officially stepped down from her seat at the high court. Hathaway faced up to 18 months in federal prison.

Her attorney, Steve Fishman, had asked O’Meara for probation and community service. U.S. Attorney Barbara McQuade had asked for 12 to 18 months in jail, restitution and up to a $30,000 fine.

“This was not a crime resulting from a single decision or a momentary impulse,” Assistant U.S. Attorney Daniel Lemisch wrote in the government’s sentencing memo, reported inThe Detroit News. “This was a calculated crime that was committed over a significant period of time and involved the use of the defendant’s own stepchildren to aid in the concealment of assets.”

Hathaway, speaking publicly for the first time, was on the verge of tears while speaking to O’Meara.

“Your honor, I stand before you a broken person,” said Hathaway, 59. “I am ashamed, embarrassed, humiliated and disgraced, and I have no one to blame but myself. I take full responsibility for my acts and am truly sorry for the choices I made.”

“This is hard,” O’Meara said, after extending praise to the defense and prosecution for their arguments. “We’re talking about a defendant that has accomplished a great deal in her lifetime and has done well and who I hope will be able to accomplish more… after all this is over.”

The Associated Press noted that the 366-day sentence will allow Hathaway to get time off for good behavior, meaning her actual time in custody likely will be nine to 10 months. O’Meara did not elaborate on why he chose that punishment, saying only, “I have thought a great deal about this.”

Hathaway allegedly transferred the title of two homes into the names of her stepchildren in order to help the short sale of her Grosse Pointe Park home go through, saving an estimated $600,000. Soon after, she transferred title of the two other homes back.

Mortgage lender ING Direct told prosecutors Hathaway’s concealment of assets while seeking a financial hardship to unload a $1.5 million Grosse Pointe Park home for $850,000 on a short sale only set the lender back $40,000 to $90,000, after she paid $10,000 at closing, according to the report.

Once Hathaway pays her restitution, federal prosecutors have agreed not to pursue forfeiture of her second home in Florida.

According to the News, ING Direct determined it would have demanded $50,000 to $100,000 from Hathaway before the short sale if loan officers had known about the assets and available cash she concealed in a “scheme” to get mortgage relief, McQuade said.

“Homeowners who play by the rules should know that those who don’t will be held accountable, no matter who they are,” McQuade said in a statement.

Dan Pero, president of American Justice Partnership and a former member of the Michigan Judicial Tenure Commission, who filed the initial formal complaint against Hathaway with the JTC, said that “[Hathaway’s] true offense was not confined to merely stealing from her bank, but includes embarrassing the state’s highest Court and diminishing public respect for the law’s most important officers. Even after admitting to her crimes, she has never apologized to the people of Michigan or her colleagues on the Court. Frankly, I think she deserved the maximum 18-month sentence recommended by prosecutors.”

Hathaway won her seat on the Supreme Court in November 2008, defeating then-Chief Justice Clifford W. Taylor.